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How zero became 2.5%

REPORT #1,125: During last year’s election campaign the mayor proposed zero-based budgeting. Instead, as council prepares to create a four-year budget, we’re looking at built-in starting increases of 2.5 per cent. How did that happen?

Monday, Sept. 14, 2015 – London Ontario

During last year’s civic election campaign, Matt Brown promised if he was elected mayor he would seek to impose the discipline of zero-based budgeting on City Hall.

He was elected, by a landslide as it turned out. But you don’t hear much about zero-based budgeting these days.

Instead, as city council prepares tonight to begin the complex process of creating a multi-year budget, the buzz word around City Hall is efficient and effective service delivery.

Zero-based budgeting is time consuming. It starts every year from a ‘zero base’ and every function within an organization is analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one.

Martin Hayward, the city treasurer, defends the current system. The concept of zero-based budgeting “is built into service review,” he says, “when we ask, do we want to do this, do we need to do it, can we do it differently?”

Having to answer those questions has been a “big change for some departments that were used to more, more, more,” Mr. Hayward adds. To get more now, departments have to make a case through city council’s strategic investment process.

“The real goal,” Mr. Hayward says, “is to have budget increases that are acceptable, and allow council to get its strategic investments done.”

Certainly service review is an effective tool. But a full-out examination of a service – take garbage collection, for example, which costs more than $13 million a year – only takes place occasionally, not annually.

The strategic investment process, which requires development of a business plan for each project, only applies to new initiatives.

Therefore, in crafting the annual base for the four-year budget, the automatic assumption is that a service will continue as is with a little extra added each year to cover rising costs.

The result is what will be acknowledged tonight when council meets as its strategic priorities and policy committee. The four-year budget projections build in an automatic annual 2.5 per cent increase to the property tax rate. That’s for the basic package of services, not including extending coverage to new neighbourhoods nor adding any enhancements.

Over four years, that’s a compounded increase of 10.38 per cent just to maintain existing services as they currently are.

To put that into perspective: The basic budget starts with increases at almost twice the Ontario inflation rate. And it’s more than double what the city has agreed by contract to pay its inside and outside workers during the same timeframe.

Many Londoners are receiving similar wage increases in the 1 – 1.5 per cent range. As such an annual starting point of 2.5 per cent for the basic budget is not sustainable.

That does not include any of the strategic investment projects from council’s list, which will be reviewed at the meeting tonight. That list is 21 items long, with a potential ‘worst-case’ price tag of $74 million.

Before anyone panics, three points: First, that extra spending, if all of it was committed, would be spread over four years or beyond. Second, it is not necessarily beyond the city’s capacity; the so-called Millennial council, elected in 1999, committed $100 million to special projects during its three-year term. Third, the city has other sources of revenue to pay for these projects besides property taxes, including reserves, dividends from London Hydro, debt and government grants.

Fourth, though, whatever gets spent will ultimately impact the basic budget and its built-in 2.5 per cent increase. The expectation is for average annual property tax increases – including the strategic projects – of 2.9 per cent.

It is illustrative to recall what happened after the Millennial council was done spending. There was no property tax increase in 2000 and 2.5 per cent in 2001. Then boom – 4.6, 3.9, 8.1 and 6.6 per cent in the following four years as the bills started to come in.

Mr. Hayward was not the city treasurer during those free-spending days immediately after the turn of the century. His reputation since taking the job is he is a prudent and intelligent steward of the public’s money.

But he is subject to the will of council and the pressures of the administration. So far he’s managed to hold that to 2.5 per cent per year. Absent of zero-based budgeting, though, we don’t know whether it really needs to be. And there doesn’t appear to be anything built into the four-year budget process to force an answer.

Maybe the mayor ought to be asking that question again: How did 2.5 become the new zero?

There is a change; the new Council has made it clear they are in charge! Staff will do as they say! Have you noticed the term "they are the experts" meaning staff accept when Council disagrees such as Palace Theater and Post office. How did 2.5 become the new zero; ask how police were able to achieve a 1.9% wage increase without increasing their budget because Chair of Police Board indicated city had a contingency plan. Note the police excluded wage increases from their (now) approved budget for 2015. How has the answers or even more important who is the EXPERTS?

A very disappointing - but not surprising - from a Council that couldn't wait to get rid of all those bad guys on the last Council. The starting point increase is unconscionable and extravagant. Another political power trip. And sure, blame it on poor ol' Joe who thankfully gave us a couple of zeroes. Taxpayers are stretched - and nobody gives a damn. Politicians building their new empires - in spades.

Tony is correct Tucker.Most people who are envious, bitter and negative are that way because they have made poor choices and by your constant tone you have made many.Look in the mirror I am sure you do not like what you see.It is never to late to change Tucker. There is goodness in everyone, even you.I will pray for you.

Evelyn, I would disagree things are as simple as you describe, i.e., "bitter and negative are that way because they have made poor choices". We cannot control all influences that result in the kinds of choices from which we are able to choose.

Many external forces are massive and out of our sphere of control. That essentially forces some people onto certain paths that are not choices, but ultimatums.

"Wonder if I would be using a gun, dumb, suckers, common naive suckers, suck it up, pigs, LaLa, useless crap, pompous altitude(?), hair brained, romper room" and bleeped out swearing.These are all words and phrases used by Tucker.Does this sound like someone who views himself as possessing "good open insight"?Tucker we get it' you probably will not be voting Liberal.Differing viewpoints are healthy but it cannot happen when you use disrespectful hurtful language.

But my view point will not allow a provincial government to destroy our once great province because of their greedy, corrupt, lying, stealing, wasteful, misleading, cheating, destructive so called premier, with their SOLE PURPOSE of creating a larger greedy vote block, not giving a dam for Ontarians.

Because the “Liberal Diarrhea Swamp” has flooded Ontario with greedy, dumb, docile, naive suckers who have a F$$$ you Mack don’t care about fellow Ontarians attitude………..happy to say may be coming to an end in three years.

Evelyn I ask you, can you describe our “GARBAGE GOVERNMENT” any different.

PS: “Gun” never used the word but, are you an overpaid, lazy cop? Difference here Evelyn, I WILL pray for you.

#We would all benefit if we restrain our outrage —
Leila Paul2015-09-15 19:00

I understand your anger Tucker because we are being cornered into circumstances that deny us the things we believed we've earned and worked for.

I too am usually guilty of verbal excesses. But it might be good for all of us to restrain our expressions so that we do not create additional tensions.

This is a time of social fragility and the delicate balance must be carefully maintained. I know I'm among those who speaks too freely. But I hope we can all be more restrained in our choices of words - for that may be all that really is within our ability to choose.

It appears you read but do not understand. Judging by your writing style and comments either you did not go far in our educational system or English is not your first language.Please refrain from profanities.

Tucker all you know is anger. Before the Liberals I am sure you were mad at the Conservatives and before that I am sure you were mad at the NDP.....etc.It seems the only one your are not mad at is a convicted felon who still collects a $125,000 pension that you pay for.Go figure!

Our demographics are going to change with the possibility of more residents coming here who may not be employable - even if jobs were available.

If some future residents are coming from a place where violence is common and the first method sought to achieve their goals, we will need a police force that is prepared for the worst. We can always hope for the best, but must be prepared for the worst.

I do not support the existing expenditures that are not intended to provide safety, hygiene and good sewage treatment and disposal, and good roads among other essentials.

But London's Police budget must be adequately funded to meet potential needs if incoming residents MIGHT create a need for greater vigilance by LPS. We have a duty to enable them to perform their jobs in service to us and our safety.

I do not know your background, but you're either a new Canadian or if you've been here most, or all, of your life then you should know even when we're angry insults do not prove you are right and even less do they indicate your knowledge is superior.

London's Police Services will be one of our most valuable service in the near future if our economy tanks further. And if we get "refugees" who we've seen in Europe throwing stones at police, then our police will need every imagine protective devices as well as technologies to track any potential incoming trouble makers.

Some EU countries have had their border police subjected to violence by these presumably victimized migrants. If they make it to London, I fear for the safety of our police who we may need to protect us. If we don't surrender what these migrants want, if they get here, we may find our houses under attack by stone throwers. A minority admittedly, but they already come entitled and full of demands.

LPS must be given whatever they say they need to protect themselves in order that they are able to protect us.

I do not know your background, but you're either a new Canadian or if you've been here most, or all, of your life then you should know even when we're angry insults do not prove you are right and even less do they indicate your knowledge is superior.

London's Police Services will be one of our most valuable service in the near future if our economy tanks further. And if we get "refugees" who we've seen in Europe throwing stones at police, then our police will need every imagine protective devices as well as technologies to track any potential incoming trouble makers.

Some EU countries have had their border police subjected to violence by these presumably victimized migrants. If they make it to London, I fear for the safety of our police who we may need to protect us. If we don't surrender what these migrants want, if they get here, we may find our houses under attack by stone throwers. A minority admittedly, but they already come entitled and full of demands.

LPS must be given whatever they say they need to protect themselves in order that they are able to protect us.

I do not know your background, but you're either a new Canadian or if you've been here most, or all, of your life then you should know even when we're angry insults do not prove you are right and even less do they indicate your knowledge is superior.

London's Police Services will be one of our most valuable service in the near future if our economy tanks further. And if we get "refugees" who we've seen in Europe throwing stones at police, then our police will need every imagine protective devices as well as technologies to track any potential incoming trouble makers.

Some EU countries have had their border police subjected to violence by these presumably victimized migrants. If they make it to London, I fear for the safety of our police who we may need to protect us. If we don't surrender what these migrants want, if they get here, we may find our houses under attack by stone throwers. A minority admittedly, but they already come entitled and full of demands.

LPS must be given whatever they say they need to protect themselves in order that they are able to protect us.

Phil - my apologies. The software indicated two or three that times the code had not been entered in the required box, so I entered it again each time. I hope that explains the entry three times of the same message. I hope you'll forgive the apparent sloppiness.